EconPapers    
Economics at your fingertips  
 

The determinants of exchange rate risk management in developing countries: evidence from Indonesia

Nevi Danila and Chia-Hsing Huang

Afro-Asian Journal of Finance and Accounting, 2016, vol. 6, issue 1, 53-67

Abstract: Studies on exchange-rate risk management in developing countries are still very rarely addressed. This study investigates determinants of exchange rate risk management (hedging) in Indonesian firms. Using 276 samples of listed firms in the Indonesia Stock Exchange and employing a Logit regression model, we found that only firm size is associated with a hedging in the listed companies. The findings are not consistent with the study proposed in the developed countries. It suggests that most of the large Indonesian companies are conglomerates with controlling shareholders who have the authority for hedging and making financing decisions. The finding also suggests that the hedging market in Indonesia is not yet mature. Furthermore, firms are either not familiar with the hedging instruments or may not be big enough to hire professionals to deal with the complicated and costly hedging instruments.

Keywords: derivatives; firm size; market to book asset ratio; risk management; hedging; exchange rate; dividend yield; leverage; profitability; Indonesia; developing countries. (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=74552 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:afasfa:v:6:y:2016:i:1:p:53-67

Access Statistics for this article

More articles in Afro-Asian Journal of Finance and Accounting from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().

 
Page updated 2025-03-19
Handle: RePEc:ids:afasfa:v:6:y:2016:i:1:p:53-67